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Over the weekend the situation has got more uncertain in Italy after the Italian president named former International Monetary Fund official Carlo Cottarelli as Italy’s interim prime minister. The anti-establishment forces abandoned their efforts to form a ruling coalition at the weekend after a standoff with the president.
Cottarelli said on Monday that he will put together a government “very quickly” to accompany the country to fresh elections, to be held in the fall or early next year.
“I’ll present myself to parliament with a program which — if it wins the backing of parliament — would include the approval of the 2019 budget. Then parliament would be dissolved with elections at the beginning of 2019,” Cottarelli said “In the absence of (parliament’s) confidence, the government would resign immediately and its main function would be the management of ordinary affairs until elections are held after the month of Augus
t,”
Italian stocks hit by political uncertainty Italy MIB -1.8%
– Since the high of May 7 the MIB is down 10.4%.3 Largest Issuers of Government Debt Globally … 1) U.S., 2) Japan, 3) Italy.
Presents a nice scenario for bears should the Anti-Euro groups within Italy get their way (Italexit), due to Italy being the 3 largest issuer of government debt globally.
^^^^ +1 and +1 … YES – the PIIGS are always hungry & prime example of dangers of “I will pay on Tuesday for a hamburger today” …. we too in USA must solve those issues of DEBT (including unfunded liabilities) :ohmy:
^^^ Haven’t gone through Bank For International Settlements (BIS) data yet as part of my fundamental risk analysis to determine how “interconnected” debt is among Eurozone nations.
That was the “systemic risk” concern during the Eurozone debt crisis back in 2011 because of how much “interconnectedness” there was among debt of Eurozone nations. At that time there was so much “interconnectedness” of debt among multiple Eurozone nations all it would have taken is one domino to fall and multiple other dominoes (Eurozone nations) would have began falling too. The approx. 20% correction of the SPX in 2011 would have been much worse had Drahi not taken the actions he did because of how “interconnected” debt was among Eurozone nations.
Yes the ECB fund created to be the PIIGS and related debt saved that day much like TARP and the sub prime bailout here in the US
Moody’s out with another note following weekend chaos
Notable was they said recent developments have no bearing on decision to put Italy’s ratings under review for downgrade
Key driver of rating action was the risk of a material weakening in fiscal strength
Had expected Five Star and Lega to form a govt over the course of this week
Abandonment of a Five Star-Lega government is not going to change their decision to review Italy’s credit rating.
New elections will likely produce similar results to the elections in March
Sovereign rating would likely be downgraded if we were to conclude that whoever emerges as the next government will pursue fiscal policies that will be insufficient to place the public debt ratio on a sustainable, downward trajectory in the coming yearsItaly Q1 final GDP +0.3% vs +0.3% q/q prelim
Final GDP +1.4% vs +1.4% y/y prelim
Q4 2017 has been revised to +0.4% q/q though, up from +0.3% with annual increase for 2017 confirmed at +1.6%.via Istat – 1 June 2018
Big up moves in Italy the new economic minister, Giovanni Tria said the country’s new government is committed to the euro.
10 year yield down30 bps at 2.827% – the biggest one day drop in 6 years.
FTSE MIB index up 3.5% in trading today at 22085
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